Despite the last US administration’s so-called “pivot to Asia,” which identified increased engagement with Southeast Asia as a priority, America’s economic footprint in the region is shrinking fast. And while US investment in ASEAN countries has fallen off precipitously, Japan has become an even more important regional partner.
By one measure of foreign investment, Japan surpassed the United States years ago, along with member states of the Association of Southeast Asian Nations themselves. That is in so-called greenfield investments, a category that refers to projects built from the ground up.
China’s growing influence is also impossible to ignore, as The Financial Times reports this week. But the real story is one of pan-Asian integration.
“It’s never going to be either-or, or binary – Japan, Korea, the EU will always be present in the ASEAN market,” Thitinan Pongsudhirak, a professor of political science at Bangkok’s Chulalongkorn University, was quoted by the FT as saying. “But China has raised its investment, and over the decade it’s going to go markedly up.”
The growth of China’s investment in the region bested Japan by 1 percentage point from 2004 to 2010, according to research cited in the article, up 7% versus Japan’s 6% pace.
The research also found that Chinese FDI focused on resources, while investment between ASEAN countries was mainly in the real-estate space. China’s integration with Southeast Asia is most visible in terms of trade, with China accounting for 20% of the region’s imports. As recently as 2000 China trailed Japan, the US and the European Union by that metric.